JP Morgan Chase recently announced that it is ending its test of $4 and $5 ATM fees in select markets. Most banks currently charge $3; Chase decided to push the envelope, in part to find ways to make up for lower fee income due to increased regulation. Chase reported that ATM transactions dropped too significantly to continue pursuing the strategy.
While some may view this as a failure at first glance, it is exactly the opposite. Consumers have broadly accepted $3 ATM fees, and since Chase customers don’t pay fees at in-network ATMs, there was no risk of losing current customers. A $4 ATM fee represents a 33% increase from current levels, meaning that transactions from non-customers would have to drastically decline to result in less revenue. (more…)